10 ways to increase your income

12 April 2019
by
National Bank

Work, savings and investments are all things that come to mind when
you think about increasing your income to accomplish your goals.
Here are 10 winning strategies to make the money you need to take a
trip, pay for your children’s education or buy the vacation home
you’ve always dreamed of.

1. Know yourself

Introspection, both financial and personal, is essential. “The
psychological aspect is very important. You have to ask yourself what
your limits are in terms of tolerating stress and taking on debt, as
well as what your motivation is for the extra income you are trying to
earn,” says Sussy Galvez, Senior Advisor, Best Business Practices at
National Bank Financial.

“The motivation is not just financial,” she adds. “For example,
according to a study conducted by The Retirement Mirage, 48% of people are
retiring earlier, but some still look for a part-time job.” They do
this not only to maintain their purchasing power, but also to feel
useful and keep their mind sharp. For young professionals, the desire
to live out their passion can be as strong as the desire for a
flexible income.

2. Identify your goals

People’s motivations for increasing their income vary based on age
and social situation. According to Galvez, the most important element
is properly identifying your goals. “Wealth does not mean the same
thing to everyone. Before discussing strategy and financial products,
think about your values and priorities.” This will allow you to stay
focused on what is essential and ensure you don’t waver.

Your goals should be realistic and quantifiable and have a timeline.
For example, you may decide to save money each month so you can take a
trip in two years, collect an annual income of $30,000 when you
retire, or pay off your student debt within ten years.

3. Make a budget

The first way to generate a surplus of income is to better control
your expenses. This is an often-ignored step, but it’s easy to
underestimate how much is spent on daily transactions and monthly subscriptions.

“For example, if you cut out buying a coffee every morning for $2.50
from your daily expenses, you could save $912.50 before taxes. This
could pay for the cost of a trip. Do your calculations!” adds Sussy Galvez.

Making a budget
is an excellent way to give up unnecessary expenses and maximize your
potential income. With a bit of discipline and some helpful tools, you
will get a detailed look at your expenses. This will make it easier to
implement an efficient strategy.

4. Learn to save

There are a
lot of money-saving tricks to help you reach your savings goals.
Most of the time, changing some of your habits is enough. Small and
simple actions can make a big difference.

You could, for example, lower your cell phone data or look for
special deals when you go grocery shopping. If possible, you could
also opt to take public transportation or use a bicycle instead of a
car. The famous American investor Warren Buffet recommends withholding
your savings and living off what you have left over. That way, you
won’t be tempted to “cheat.”

5. Negotiate with your employer

An employee can request a salary
increase from their employer. However, they must first understand
their value as an employee and be able to demonstrate this. You need
to be well-prepared with regards to both your contribution to the
company and in your understanding its internal rules.

6. Become a self-employed worker

With the emergence of the gig economy, it’s more and more common for
employees to work for themselves alongside their main job. This
solution is doubly advantageous, as it both increases your income and
makes your time and expertise profitable. It also allows you to build
on a passion that may not be fulfilled at your main job.

Galvez suggests asking yourself the following questions before you
take this leap:

What is the tax impact? Your income as a self-employed worker
will be added to your salary and could considerably change your tax rate.

What costs are incurred? Self-employed workers who are just
starting out often forget to factor in new costs: purchasing
materials, representation costs, advertising, website,
transportation. Which of these costs are deductible and, more
importantly, which are not?

Is it worth it? This question may seem obvious, but it’s
crucial that you address it. After calculating the hours, costs and
labour, will the business be profitable?

7. Start a home business

The sharing economy and all the online platforms that are available
(Airbnb, Turo, Breather, Etsy) bring about the opportunity to start a
home business. This could be an excellent way to make a profit off
your assets and sell products you create yourself. An entrepreneur
should ask themselves the same questions as a self-employed worker,
but they must also check if there are special permits to obtain or
laws that need to be followed.

8. Invest in income property

“Anyone can be successful in real estate, but not everyone is made to
own 100 buildings. If being in debt stresses
you out, this is not for you,” warns Jacques Lépine, President
of the Real Estate Investors Club of Quebec.

The first step is to acquire a few income properties, which you can
purchase by taking advantage of a leveraging effect: the value and
income of a first building allows you to borrow to purchase a second
one, and so on.

Sussy Galvez offers this list of advice for future investors:

Get professional training or work with an expert to determine the
value of a property;

Conduct a market study to determine which neighbourhood has
optimal traffic;

Improve your credit report before going to the bank;

Consult with a financial planner to learn more about income
taxation, possible deductions and the impacts on your estate in case
of death;

Establish a management structure and figure out in advance who
will take care of collecting rent, doing renovations, marketing, and
evaluating renters;

Meet with investors who are already successful. For example, by
becoming a member of the Corporation des propriétaires
immobiliers du Québec, you can benefit from the
experience of other income property owners and learn from their
successes as well as their mistakes.

9. Flip properties

With converting, or “flipping,” properties, the goal is to purchase
properties sold below their market value, renovate them and then
resell them for a profit. “You have to know how to find good deals,
evaluate properties and quickly bring your ideas to life,” explains
Lépine, who has had a long career in the industry.

Professional training is recommended so you can learn to properly
evaluate properties and know what it will cost to resell them for
profit. It’s also important to keep in mind the importance of tax
issues. An expert’s opinion could help you avoid making certain
errors. For example, the tax rate varies enormously based on the
“intention” of the investor converting a property.

10. Invest your money

Purchasing stocks and bonds can be a significant way to make passive
income. But, again, you must understand the different products and
ensure that your choices correspond to your risk tolerance.

Whether you’re a young entrepreneur or you’re approaching retirement,
increasing your income can help you reach your
personal goals. Feel free to speak with an expert to boost your
financial knowledge and understand the products that are available so
you can make the right choices.

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